Upturn in farmgate values starts to show through

A sustained rise in the GB standard pig price (SPP) has lifted pigmeat values by more than 2.6p/kg during the eight weeks to May 7, according to Quality Meat Scotland (QMS).

With prices having risen in each of the last five weeks of the reporting period, QMS senior economics analyst, Iain Macdonald, highlighted currency changes, a slight regrowth on pork consumption and a 1% reduction average carcase weights as key contributors to the upturn in farmgate values.

He also pointed out, however, that SPP remained nearly 13% below its level in the same period of 2015, and that soya prices had seen “significant” increases in recent weeks, a change which certainly won’t be helping producers’ bottom line.

Focusing first on the positive, Mr Macdonald pointed out that pigmeat sales volumes had recently shown signs of recovering some of the ground lost in 2015.

“During the 12 weeks to April 26 2015, GB households bought nearly 8% less pork than a year earlier,” he said, adding that, in contrast, sales volumes had begun to recover in the corresponding period this year, rising by 0.7%.

“Moving into May, industry sources point to the recent spell of warm, dry weather across much of the UK as a stimulus for demand with people beginning to hold their first barbeques of 2016.

“A reflection of a shift in the balance between supply and demand has been seen in the spot market with reports suggesting that prices have started to exceed contract levels. This is a clear sign that a seasonal tightening in pigmeat production has resulted in supply beginning to lag behind demand.

“It also seems likely that a stabilisation of prices across the EU at a level much closer to those in the UK, plus a weaker sterling against the euro than 12 months ago have limited the downwards pressure on the market.”

On a less positive note, however, he said there that been “some significant increases in the price of soya-meal in recent weeks” following heavy flooding in the key soya growing regions of Argentina, a development which will have been “unhelpful” to pig producers concerning their bottom line.

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